New insurance levy announced

A levy of up to 2 per cent on all non-life and health insurance polices is to be introduced to fund Quinn Insurance.

The new Insurance (Amendment) Bill 2011 was published today by the Minister for Finance.

The joint administrators of Quinn Insurance have previously told the courts that they would need more than €600 million from the Insurance Compensation Fund to meet the solvency requirements for the company.

The Insurance Compensation Fund currently stands at about €40 million. It is believed that the levy, which will indirectly be charged to consumers through their insurance providers, will raise about €65 million per year. Health insurance is not included in the levy.

The Bill will be brought before the Seanad this Thursday and will complete its passage through the Dáil no later than September 29th.

In addition, the Central Bank is directing the Minister of Finance to advance money to the fund for the last quarter of 2011, as permitted under Section 5 of the 1964 Insurance Act.

A similar levy was introduced in 1984 following the collapse of PMPA the previous year. At that time there were not sufficient monies in the fund to meet the liabilities of PMPA.

A levy of 2 per cent was paid by all non-life insurers until the end of 1991. This was then reduced to 1 per cent for the following year.